ECONOMIC OPPORTUNITY

Austin, Texasâ€"The Center for Public Policy Priorities (CPPP) today highlighted a new report showing that, along with boosting the economy and saving and creating jobs, seven provisions of the American Recovery and Reinvestment Act of 2009 (ARRA) enacted in February kept 640,000 Texans from falling into poverty this year. According to the study, released today by the Washington, D.C.-based Center on Budget and Policy Priorities (CBPP), ARRA also reduced the severity of poverty for another 2.9 million impoverished Texans by boosting their incomes, in most cases by at least $700.

Despite strong growth in indicators related to GDP, population, employment and exports in one of the state’s largest boom times, the overall conditions for low-income working families saw little improvement since 2004. This report updates how Texas’ working families fared during a period of economic growth and proposes policy solutions to ensure that the state invests in work force and skill development for working Texans.

Although Texas was late to feel the effects of the national recession, economic indicators including the unemployment rate, underemployment, home foreclosure rates, and declining wages demonstrate that Texas is feeling the full impact of the economic downturn. For example, unemployment numbers released today show that our unemployment rate has climbed to 8.2 percent, with 44,700 Texas jobs lost in September. In addition, underemployment, household poverty, and labor force participation are headed in the wrong direction. The State of Working Texas 2009 annual report summarizes the employment situation in Texas and analyzes various indicators to highlight economic conditions for Texas workers.

With the unemployment rate reaching 7.9 percent in July, coupled with a decrease in job creation, Texans face greater financial hardships, with many unable to pay their mortgages, afford health care and provide for their family’s basic needs. With unemployment on the rise, more Texans turn to the unemployment insurance (UI) system for financial relief to bridge the gap between jobs. Unfortunately, fewer than 35 percent of unemployed Texans became insured during the first quarter of 2009 â€" maintaining Texas’ ranking of 50th in the nation. Despite a low recipiency rate and a lower unemployment rate compared to the rest of the nation, the chronically insolvent UI Trust Fund ran dry after only six months of elevated claims. The Trust Fund now faces a gigantic deficit heading into 2010, billions of dollars in future debt service, and higher employer rates for years to come.

This Policy Page provides an overview of the Texas labor market and the state of the unemployment insurance system.

If the First Infantry suffered 9 percent wounded, while the Second Infantry suffered “only” 7.9 percent, sending medicine to the First Infantry, but not the Second, would make no sense. Every wounded soldier deserves help. And, if the Second Infantry is bigger than the First, sending help to the Second would be even more important to the strength of the army. Yet, HR 3404 (McDermott) and S 1647 (Reed) propose to trigger an additional 13 weeks of critically important Emergency Unemployment Compensation for unemployed American workers based upon state unemployment rates. Unemployed workers in 28 states, including Texas, would not get help because of state rates below the trigger. This approach is unfair to American workers and counterproductive for the national economy. Congress should help workers in all states equally.

The most important natural resource Texas has is Texans. Unfortunately, our state suffers from a “brain drain” as many of our best and brightest students leave to further their education. A contributing cause is a lack of “tier one” universities in Texas. Proposition 4 (a constitutional amendment to create a National Research University Fund to help fund certain state universities to become nationally recognized research institutions) would provide funding to Texas universities seeking to attain tier-one status. With more university research, the state hopes for new jobs, increased wages, and more state and local tax revenue. This Policy Page describes criteria commonly used to determine tier-one status, the benefits of having more tier-one universities in Texas, progress of selected Texas schools toward tier-one status, and the specifics of Proposition 4.

Texas Weatherization Assistance Program Provides Relief to Low-Income Families and Creates Jobs for the New Economy

Through the American Recovery and Reinvestment Act (ARRA), Texas will receive $327 million in additional Weatherization Assistance Program (WAP) funds through 2011. The new funds will increase the number of homes weatherized in Texas to between 30,000 and 35,000 homes, up from 4,173 in 2006. Weatherization helps low-income communities by making their homes more energy efficient, thereby reducing the cost of utilities and homes from extreme weather conditions. Weatherization also enhances the value of a family’s primary asset â€" their home. This policy page provides background on the Texas WAP and explores how ARRA funds can prepare more Texans for jobs of the future, meet consumer demands, and improve the quality of life for low-income seniors, persons with disabilities, and families with children.

Texas’ commercial health insurance market is considered “healthy” because it has a relatively large number of carriers writing coverage, is subject to a low level of regulation compared to other states, and generates $22 billion in premiums annually. The effect of this market on Texas consumers, however, is anything but healthy. For Texas health insurance consumers, this market produces some of the fastest growing premiums in the nation, one of the lowest rates of coverage through job-based insurance, and small employer premiums as high as $29,000 a year per employee. SB 1257 makes changes in the health insurance market which will allow consumers to maintain coverage during certain disputes with insurers, provide consumers with more information on health insurance, and establish a mechanism to review large rate increases for small employers to ensure they are justified.

SB 6 will create the Healthy Texas program. With nearly 6 million Texans lacking health insurance coverage and the cost of coverage growing ten times faster than incomes, Texas needs to take bold steps to confront issues with access to health coverage. Healthy Texas has the potential to put private health insurance coverage within reach of many uninsured Texans working for small employers by addressing the primary barrier to coverageâ€"the high cost of premiumsâ€"using a public-private partnership.

Public structures such as Medicaid, Food Stamps, and Unemployment Insurance were created to help families in tough economic times and to help the economy recover from a down cycle. These are indeed tough timesâ€"we face the worst economic crisis since the Great Depression. Tragically, many Texans are becoming aware for the first time of the crumbling nature of many of our public structures, weakened by years of neglect when times were good. Now that times are tough, we find our systems unprepared. Fortunately, though, the new federal economic recovery law makes resources available to help repair and improve these systems, which will in turn energize economic activity and get Texas on the road to recovery.

But, Texas will only get the federal fundsâ€"and the needed improvements to our public structuresâ€"if state policymakers make the right choices, soon.

Consumers and employers deserve to know that their hard-earned money going to health insurance premiums is used by insurance companies primarily for health care costs rather than insurance company administration, marketing, and profits. HB 531 sets standards for how insurance companies use premiums dollars that will introduce a much needed level of accountability and transparency to the health insurance market.

Reliable means of transportation are essential for families trying to get to and from work, and they are especially important for out-of-work Texans trying to find employment. Current asset tests for determining eligibility for public benefits unfairly penalize Texan families for owning reliable means of transportation. CPPP staff recently offered testimony in support of updating Texas' asset tests to ensure that needy individuals and families get the help they need and still have transportation.

ARRA provides enough funding for additional eligibility staff and 12-months continuous coverage of children on Medicaid. The TANF Emergency Contingency Fund also gives us the opportunity to help extremely poor families during the economic downturn.

With more than $16 billion in federal recovery spending coming to Texas through state agencies, the Center for Public Policy Priorities urged state policymakers to invest in programs that will give struggling low-income families and unemployed workers new opportunities to succeed economically. CPPP also called on the state to ensure that recovery money helps stabilize the economy and benefits those hurt most by the recession. Spending should be done openly, efficiently and with accountability.

The Center for Public Policy Priorities today urged state policymakers to draw down available funds for unemployment insurance (UI) benefits in the federal recovery law. The center highlighted an exchange yesterday between Federal Reserve Chairman Ben Bernanke and U.S. Senator Jack Reed (D-RI) regarding the counterproductive effects of states forgoing money for UI:

BERNANKE: If unemployment benefits are not distributed to the unemployed, then they won't spend them and it won't have that particular element of stimulus.

SEN. JACK REED (D-RI): So if this was done on a wide basis, it would be counterproductive, not productive?

BERNANKE: It would reduce the stimulus effect of the package, yes.

Today, Congress released the details of the American Recovery and Reinvestment Act (ARRA), which provides $789 billion to stimulate the economy. Many of these measures will also help protect vulnerable Texans during this economic downturn. To take full advantage of the benefits in the recovery package and set our economy on the road to recovery, Texas must plan immediately. We applaud Speaker Joe Straus for appointing the Select Committee on Federal Economic Stabilization Funding, charged with monitoring federal action and suggesting to standing committees needed steps to qualify for federal economic recovery funds. This paper summarizes the portions of the bill that affect the state budget.